Digital Age Imperatives and Firm Internal Control Quality : Evidence From CEOs Personal Trait and Type of State Owned Enterprises

The significance of digital transformation (DT) at the firm level has become increasingly important as the global economy shifts towards a digital-based system. The present study examines the relationship between DT and a firm’s internal control (IC). Further, it discusses the interactive influence of DT and CEO's personal traits on the firm IC quality in diffrent type of state owned enterprises (SOEs). Using data from A-shares non-financial enterprises listed on Shanghai and Shenzhen stock exchanges between 2007 and 2020, the finding indicates that DT enhanced IC quality, suggesting that adopting DT improves intra-firm communication between stakeholders, top management, and employees. It was further found that DT has a more pronounced impact on the quality of IC in firms headed by women, young CEOs, and CEOs with high levels of education. Moreover, CEOs under central government enterprises exhibit more DT inclination than their counterparts at local government enterprises. In addition, we show that DT affects IC indirectly via audit quality (auditbyBig4). The study findings are robust to different estimation techniques and instrumental variables